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Land Acquisition: Issues and Challenges

Land Reforms In India: An Unfinished Business

The Traditional Land Reforms

The Britishers in India were not at all keen in adopting progressive land reforms measures for the rural farmers. So, after independence, we adopted several measures to usher in long stalled land reforms.

1. Abolition of Intermediaries

Intermediaries like Zamindars, Talukdars, Jagirs and Inams had dominated the agricultural sector in India by the time the country attained independence. Soon after independence, measures for the abolition of the Zamindari system were adopted in different states.

Reason: This kind of system was exploitative for tenants and Zamindars never invested in agriculture because their rights were not permanent, which ultimately led to low production.

Outcome: Tenants came in direct contact with government, though he continued to pay rent which was very nominal. This was the most successful land reform in the country, but it benefited only one class of tenants, who were owners of land prior to British land revenue system

1. Tenancy Reforms

This reform sought to provide security of tenure to tenants, so that land owners cannot evict them arbitrarily along with regulation of rent. This reform sought to prevent exploitation and giving security of tenure so that they could invest in land. This reform required tenants to legally register with the govt. in order to get protection.

Outcome: This reform was not very successful, except in states of West Bengal and Kerala, because of lack of political will at the state level. Moreover, since landowners were politically active, they didn’t allow the tenants to register with govt.

3. Ceiling on Land holdings and Redistribution of Surplus land

The third important step of land reforms relates to the imposition of ceiling on land holdings. Ceiling on land holdings implies the fixing of the maximum amount of land that an individual or family can possess.

This reform sought to bring parity in terms of distribution of land through two aspects: one, the fixation of ceiling limit and two, the acquisition of surplus land and its distribution among the small farmers and landless workers. This reform was accompanied by Bhoodan movement, (launched by Acharya Vinoba Bhave)

Outcome: Actually, the limit on ceiling was kept very high and the redistributed land was mostly infertile land

4. Consolidation of Land Holdings

Consolidation of Holdings means bringing together the various small plots of land of a farmer scattered all over the village as one compact block, either through purchase or exchange of land with others.

Reason: The average size of land holdings in India is very small. The size of the holdings is decreasing but number of holdings is increasing over time. This is due to the inheritance laws. If farms are small and scattered, we cannot go for mechanization, etc.

Oucome:Not very successful, because the owners did not had conclusive rights so there was fear among farmers that they may lose land ownership. Moreover, there is mix of fertile and non-fertile land, so it was difficult to get same quality of land.

5. Cooperative Farming

It has been advocated to solve the problems of sub-division and fragmentation of holdings. In this system, farmers pool their small holdings for the purpose of cultivation and reap benefits of large scale farming.

Reason: Economies of scale can reduce input cost

Outcome: This was the least successful land reform in the country due to inconclusive ownership rights.

Current Scenario

Now, the land ceiling cannot be implemented because landholdings are small, but, land consolidation and tenancy reforms are more relevant now.

Market-led Land Reforms

These reforms come into picture after the 1991 economic reforms, which gave private sector larger role to play. Post-1991 reforms, land became important for industrial and infrastructure as well, along with agriculture.

1. Modernization of Land Records

This reform seeks to solve the issue of inconclusive land ownership rights. This includes survey of land holdings in the country and digitization of land records and revenue records, so there is less subjectivity in terms of ownership rights. It is significant reform because it will facilitate land consolidation.

National Land Records Modernization Program – It was launched in 2008, to modernize management of land records, minimize scope of land/property disputes, enhance transparency in the land records maintenance system, and facilitate moving eventually towards guaranteed conclusive titles to immovable properties in the count.

This will facilitate easy purchase and selling of land.

2. Facilitating Land Leasing

There should be compulsory registration for all the land owners and lease holds. Registration of landowners will ensure security of land ownership. They can lease their land to landless/tenants and settle in urban areas. The idea is that, since there is massive rural-urban migration and those who are well-settled in urban areas can lease their land to their village counterparts.

At present, NITI Aayog is preparing a model agricultural land leasing law, to formalise leasing of agricultural land.

3. Land Acquisition for Public Purpose

In 2013, govt. enacted “The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013″, to provide just and fair compensation to farmers while ensuring that no land could be acquired forcibly.

There was a big debate on this issue over the last year, when NDA govt. brought an amendment bill, which sought to remove all necessary checks (such as consent clause, social impact assessment, minimum consent requirement, etc) in land acquisition for 5 sectors namely – defence, rural infrastructure, affordable housing, industrial corridors and infrastructure where central govt. owns land.

October 10, 2016

[op-ed snap] The problem with government as landlord | Part 2

Steps being taken: The government’s strategic sales push is putting in place mechanisms that will bring clarity to the asset-stripping issue.

Lessons from the Ministry of Defence: The Ministry’s success in digitizing, indexing and computerizing land records, and the exception made to the rule of non-use of defence land for other purposes, has facilitated the easier transfer of defence land in recent years.

Lessons from the railways ministry: The railways have an exclusive Rail Land Development Authority for developing unused railway land.

Other options: Leasing-But unless the complications associated with leasing laws in states are resolved, it cannot be actively pursued as a strategy.

A Land bank: Similar to the Chinese model, the government recently floated the idea of a SPV or a land bank to consolidate the landholdings of idle PSUs and use them for other public purposes.

The government’s policy think tank NITI Aayog is currently examining the viability of this route

The way ahead: The government should push for land records modernization programme taking lessons from Karnataka’s record in digitization and Rajasthan’s efforts towards registration of land titles.

It is crucial that the states and ministries are on board if the land records modernization programme, the monetizing of PSU land and optimal utilization of available land are to be a reality.

October 10, 2016

[op-ed snap] The problem with government as landlord | Part 1

Background: Issues with disposing of the land owned by PSUs in wake of the government’s move to identify and sell PSUs that are losing propositions.

According to some estimates, around one million acres of surplus land in around 300 central PSUs is lying vacant across the country.

The opportunity cost: Unlocking this surplus land could solve many problems in land-starved cities e.g. allowing for civic infrastructure such as hospitals, schools and roads.

Recommendations of Vijay Kelkar panel: The panel identified monetizing surplus government land from port trusts, railways and PSUs as the ideal solution to India’s urban problems—besides the benefits of unlocking huge revenue and betterment of the fiscal consolidation situation.

The K. Roongta committee constituted by the Planning Commission also proposed this.

Issues with disposing of surplus government land: Lack of adequate land records and the absence of a single comprehensive land database is a major roadblock. Also, in most states, the tasks of integrating land records and registration are handled by separate departments, often leading to incongruity in data sets.

Opposition from trade unions, illegal encroachment and lack of coordination between various ministries are major issues.

PSUs themselves are often in the dark as to the extent and nature of their holdings.

Steps involved in the monetization of PSU land—such as identification of surplus land and approval from the relevant ministries—are lengthy and cumbersome.

The sale process itself is challenging e.g. in the VSNL case, government sold 25% equity to the Tata group in 2002—but it took until August 2016 for the legislative changes that will allow the demerger and productive use of the surplus VSNL land.

October 10, 2016

[op-ed snap] India’s land laws and FDI

Theme: Removing bottlenecks to foreign investment in India.

Reform agendas in question: Amendments to the land acquisition law and improvements in the ease of doing business

Land acquisition: An ordinance to modernize India’s land laws was promulgated thrice after the incumbent government came to power in 2014; but a law could not be passed due to Opposition resistance. A model land-leasing law formulated by the Niti Aayog was mooted for States to adopt instead.

Issues with the model land leasing law: A billion-dollar plant is unlikely to come up on leased foundations.

As a result, a proposed nuclear plant has moved out from Gujarat owing to land acquisition problems, India’s largest FDI proposal from South Korea’s Posco is all but off, and job creation has hit a five-year low.

World Bank’s Ease of Doing Business index: India moved up 12 places in the index last year and may rise further.

Issues: The index is only based on speed of paperwork in Mumbai and Delhi, where there is little space for big new industries; such rankings don’t directly translate into more FDI.

Getting a construction permit online is no good if large tracts of land cannot be provided job-creating investment.

Questions (attempt in the comments section)

1

It is argued that a state-centric strategy on land acquisition will permit a more nuanced approach and It would also promote competitive federalism. Critically discuss how.

2

“The problem of land acquisition needs to be recast as the problem of efficient use of land, including the reclamation of unutilized land, the optimal alignment of complementary inputs, and the honest discharge of social responsibility aided by technology.” In the light of ongoing debate on land acquisition and challenges therein, critically comment on the statement.

3

How is the new ordinance on land acquisition legislation – the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (LARR) is different from its earlier version? Critically examine.

4

In the light of ongoing controversy on land acquisition law, it is argued that the states in India should be allowed to bring their own legislation to amend land acquisition act or enact their own land laws. Critically examine the merit in this argument.